Mortgage Refinance Calculator
Compare your current mortgage against a new refinance offer to see if refinancing saves you money.
Compare your current mortgage vs. a refinance
See your monthly savings, break-even point, and total interest saved over the life of the loan.
Principal & interest only.
Typically 2%–6% of loan amount.
How to use this calculator
- Enter your current loan balance—check your latest mortgage statement.
- Input your current interest rate—the rate on your existing mortgage.
- Enter years remaining on the current mortgage and your current P&I payment.
- Enter the new rate you've been quoted (or check current market averages).
- Pick a new loan term—keeping the same term maximizes monthly savings; a shorter term maximizes total interest saved.
- Add estimated closing costs—typically 2%–6% of the new loan amount.
- Optionally add cash out if you're tapping equity; this increases the new loan size.
- Click Calculate to see monthly savings, break-even, lifetime interest comparison, and a recommendation.
How mortgage refinancing works
Refinancing replaces your existing mortgage with a new loan—ideally at a lower rate, shorter term, or both. The financial question is straightforward: will the monthly savings pay back the closing costs before you sell or pay off the home? If yes, refinancing likely makes sense. If not, the savings are theoretical and you'll never realize them.
The break-even formula
Break-even is the number of months required for cumulative monthly savings to equal upfront closing costs:
Break-even (months) = Closing Costs ÷ Monthly Savings
If your closing costs are $6,400 and refinancing saves $320/month, your break-even is 20 months. Plan to stay in the home beyond that horizon, and you come out ahead. Sell earlier, and you've lost money on the transaction. Most financial planners recommend a break-even of 24 months or less to leave a comfortable margin.
Computing monthly savings
The new mortgage payment is calculated using the standard amortization formula on the new loan amount (current balance + cash out + any rolled-in closing costs):
M = P × [r(1+r)^n] / [(1+r)^n − 1]
Where r is the new monthly rate and n is the new term in months. Monthly savings is simply your current P&I payment minus the new P&I payment. Taxes and insurance typically don't change with a refinance (though a new appraisal can shift them slightly), so they're excluded from the savings calculation.
Lifetime interest comparison
Beyond monthly cash flow, refinancing changes how much total interest you pay over the life of the loan. This is where term length matters most. Refinancing a 27-year-remaining loan into a fresh 30-year loan lowers the payment but extends the debt and can increase total interest even at a lower rate. Refinancing into a 15-year loan usually raises the payment but cuts total interest by tens of thousands. Our calculator computes total interest on both loans so you can see the full picture.
Rate-and-term vs. cash-out refinances
A rate-and-term refinance keeps the loan size roughly constant and focuses on better terms. A cash-out refinance increases the loan balance to tap equity for home improvements, debt consolidation, or investments. Cash-out refinances carry slightly higher rates and reset the amortization clock, so weigh the use of funds carefully. Consolidating high-interest credit card debt into a low-rate mortgage can save thousands—but only if you don't run the cards back up.
When refinancing doesn't make sense
Even with a lower rate, refinancing may not pencil out if (1) you'll sell within the break-even horizon, (2) your credit has deteriorated and the new rate isn't actually better, (3) you've already paid down most of the interest-heavy early years and refinancing restarts amortization, or (4) you'd lose a low existing rate that no longer exists in the market. Always run the math—never refinance just because rates dropped.
Worked example
Scenario: A homeowner with a $320,000 balance at 7.25%, 27 years remaining, paying $2,150/month P&I. They're offered a 30-year refinance at 5.75% with $6,400 in closing costs and no cash out.
- New payment: $320,000 at 5.75% for 30 years = $1,867/month
- Monthly savings: $2,150 − $1,867 = $283/month
- Break-even: $6,400 ÷ $283 = 22.6 months (~1.9 years)
- Old total interest (27 yrs at 7.25%): ~$406,600
- New total interest (30 yrs at 5.75%): ~$352,100
- Lifetime interest saved: $54,500 (despite extending the term 3 years)
Verdict: Refinance. You'll recoup closing costs in under 2 years and save over $54,000 in interest, plus $283/month in cash flow. If the borrower instead chose a 15-year term at 5.5%, the payment would rise to ~$2,620 but they'd save $180,000+ in interest.
Glossary
- Break-Even Point
- The number of months required for cumulative monthly savings to equal the closing costs of refinancing.
- Rate-and-Term Refinance
- A refinance that replaces an existing loan with a new one of similar size but better rate or term.
- Cash-Out Refinance
- A refinance that increases the loan balance to convert home equity into cash taken at closing.
- Closing Costs
- Upfront fees to originate a new loan—origination, appraisal, title insurance, recording, and prepaid escrow. Typically 2%–6% of the loan.
- Amortization Reset
- Refinancing restarts the amortization schedule, front-loading interest again. Extending the term can increase total interest even at a lower rate.
- Discount Points
- Optional upfront fees paid to the lender to permanently lower the interest rate. One point equals 1% of the loan.
Frequently asked questions
Quick answers to the most common questions about mortgage refinance calculator.
This calculator is provided for informational and educational purposes only and does not constitute financial, legal, tax, or professional advice. Results are estimates based on the inputs you provide and standard assumptions. Actual figures may vary. Please consult a qualified professional before making financial decisions. Read our full disclaimer.